Party City's initial public offering may be an early read on the state of secondary buyout activity in the private equity industry and a gauge of investor interest in those deals.

NEW YORK (TheStreet) - Party goods retailer Party City was solidly profitable when the company was gearing for an initial public offering in May 2012. Nearly two years later, the company is again attempting an IPO. This time, however, Party City is losing money and its debt has more than doubled to over $2.3 billion.

In the intervening time, Party City's former private equity owner's Advent International, Berkshire Partners and Weston Presidio sold a majority of the company to another PE firm, Thomas H. Lee Partners, in a $2.7 billion deal that required about $1.5 billion in debt financing. The deal, called a secondary buyout on Wall Street, allowed Party City's former owners to trim their investment in the company and gave THL one of its biggest deals since the financial crisis.

Now, Party City's newest attempt at an IPO may give ordinary stock investors a major glimpse into a subtle shift in the PE industry, which could become an investible trend in coming years.

The IPO could indicate whether companies changing hands among PE buyers in recent years have become damaged by that financial maneuvering. In the case of Party City, rising debt, high interest expense and net losses standout as issues that stock investors now have to consider, in contrast to the company's 2012 IPO filing.

Party City's IPO may also be on the vanguard of a wave of secondary buyout deals, particularly in Europe. THL's takeover of the company in June of 2012 came midway through a record year for secondary buyouts, according to data from Preqin.